Cutting edge Semiconductor Technology

Credit Bloomberg.com

The US Congress recently legislated for sanctioning of billions of US dollars in subsidies for the purpose of manufacturing cutting edge semiconductor or chips in the US as an integral component of artificial intelligence (AI) advancement . The US accuses China of illegally pursuing territorial claims in international waters, non reciprocity in  technology besides other matters . As a retaliatory move the Biden administration has banned US companies and citizens to trade with Chinese companies and individuals in trade of wafer thin chips and technology to ostensibly deprive China of access to AI which the US is convinced is capable of being utilised for espionage or military aggression against US interests. This is a matter of grave concern for Taiwan and its “Silicon Shield “  strategy as Taiwan believes its sophisticated computer technology is deterring any invasion by China. South Korea and Taiwan are apprehensive that the CHIPS Act passed by the US Congress may cause chip fabricating companies to relocate to the US and for the near term cause havoc in the global chip supply chain.

Taiwan China Trade Goes on

Credit South China Morning Post

Another little known fact is that Taiwan and China have excellent official commercial and trade arrangements and Taiwanese high tech companies and global chip manufacturers such as Taiwan Semiconductor operate factories in China .Taiwan exports 42 % of its overall exports to China whereas 15 % of Taiwan’s exports are to the US.

China needs to catch up in AI

Credit The Telegraph

China  lags behind in achieving sophistication in higher end semiconductor value chain denting its aspirations to ramp up its AI proficiency levels. Despite churning out robotic or humanoid news anchors  and production of dolls that move limbs naturally when connected to the internet through a software or database and attracting the wrath of gender sensitive lobbies it remains dependent on chips the size of which are less then a fingernail. China has pumped in more then $ 140 billion after encountering recent US trade restrictions . China can impose retaliatory tariffs  on procurement of jetliners from Boeing and prefer European manufacturer Airbus. Imposing tariffs on soya bean import from USA is another tit for tat option available to China even if it means importing of  higher priced products from Brazil.

By Nadir Mumtaz